Compaq has suspended the supply of the Presario PC range to online-only retailers, as analysts expressed concern over its faltering sales and direct strategy.
The PC manufacturer has ordered Tech Data and Ingram Micro in the US to halt shipments of Presario machines to their online-only retailers for 90 days. The period will be used to re-evaluate Compaq's online channel, but will leave internet retailers such as Cyberian Outpost, PCSave.com, Buy.com and even Shopping.com - which Compaq is in the process of acquiring - in a state of limbo.
The move was being seen as a response to an ongoing price war in the cyberchannel, which resulted in resellers selling at trade prices.
Graham Taylor, analyst at Inteco, suggested that after the review period, Compaq would follow the lead of other industries where vendors cut the commission levels to online-only resellers.
'The online market has rapidly expanded and Compaq is taking stock of the situation. It has the traditional resellers that it wants to protect, but it also has to deal with cyberdealers that are shifting boxes in volume at very aggressive prices, fuelling the downward price spiral.'
But the decision came days before analysts cast doubt on Compaq's first-quarter sales and strategy.
Analysts at Merrill Lynch and Credit Suisse First Boston reduced predicted earnings because of weaker than expected January sales.
Steven Milunovich, analyst at Merrill Lynch, stated in the report: 'We believe there may be some issues with Compaq going direct.'
The reports triggered a 13 per cent fall in share value to $35.50 on 26 February.
Compaq was unavailable for comment.
Struggling security titan makes three board appointments after investor took 5.8 per cent stake last month
Commvault ousted its CEO in May and has since undergone a radical refocus
As employees demand more flexible working environments, CRN asks how the channel is adapting to the changing working landscape
Wall Street less than impressed with Oracle's growth as cloud numbers remain hidden